​World economy to leap back to growth after a drop in early 2015

The world can expect economic output to recover after its disappointing performance in the first quarter, say economists at JPMorgan Chase and Capital Economics.

Global growth has averaged 2.8 percent in the first quarter since
2010, compared to an overall rate of 3 percent, says Bloomberg citing JPMorgan analysts. So
far growth in 2015 has been just 1.7 percent, which is almost a
percentage point below the bank forecast at the beginning of the
year. In the second half of 2014 it was 3.1 percent.

“We have a forecast of a rebound in growth in the second
quarter from this disappointment, with the US leading the
way,” said Bruce Kasman, JPMorgan’s chief economist as
quoted by Bloomberg.

Kasman expects an upswing of three percent this quarter and 3.3
percent in the third.

US economic outlook is likely to be spoiled by last week’s news
of the weakest hiring since December 2013, which is suggested was
a result of lower retail sales and sales of capital goods in the
first quarter. Given that, JPMorgan estimated growth at just 0.6
percent.

The slowing growth in the US is most likely caused by an
especially frigid winter weighed down by the oil crisis.
Employment and wages will soon see a rebound as well, Stephen
Jen, founder of the hedge fund SLJ Macro Partners LLP, told
clients in a report Monday.

The expectations of further economic recovery are underlined by a
number of factors including an expansionary purchasing managers’
index (PMI) that slipped only one tenth a percentage point in
March from 51.9 in February.

Analysts also expect eurozone growth of 2.3 percent from two
percent in the previous quarter due to the €1.14 trillion program
of quantitative easing started in March by the European Central
Bank.

However, the start of the ‘easy money’ program poses certain
risks to the European sovereign debt market,
as investors fear losing money on their debt.

The €60 billion per month bond buying program, which came into
force March 9, is increasing the price of 10-year bonds, which
makes the yield fall.

On April 2 JP Morgan also revised Russia's GDP forecast for the
better after the bank adjusted its forecast for the price of
Brent crude oil from $49 to $59 per barrel in 2015. Thus,
Russia’s GDP is expected to fall by 4 percent instead of 5
percent, according to the bank.

JP Morgan analysts expect 2015 to be the second year of global
growth at about 2.7 percent even with the shock felt by the world
economy at the turn of 2014-2015.